Sunday, June 29, 2014 10:26 am

One of Greensboro’s best blogs identifies this here establishment as one of Greensboro’s best blogs. Inasmuch as I do far less original reporting than some of the other folks on the list, and have devoted far less time to blogging in general lately, I’m humbled to be included. Thanks, Liv!

In the last few months, there has been increasingpressure on public officials to stop hiding the basic terms of the investment agreements being cemented between governments and Wall Street’s “alternative investment” industry.

That pressure has been intensified, in part, by twosets of recent leaks showing how these alternative investment companies (private equity, hedge funds, venture capital, etc.) are using the secret deals to make hundreds of millions of dollars off taxpayers. It is also in response to the Securities and Exchange Commission recently declaring that many of the stealth schemes may be illegal.

And yet, as the demands for transparency grow louder, a potentially precedent-setting push for even more secrecy is emerging. Pando has learned that legislators in North Carolina — whose $86 billion public pension fund is the 7th largest in America – are proposing to statutorily bar the public from seeing details of the state’s Wall Street transactions for at least a decade. That time frame is significant: according to experts, it would conceal the terms of the investment agreements for longer than the statute of limitations of various securities laws.

In other words, the legislation – which could serve as a model in state legislatures everywhere – would bar the disclosure of the state’s financial transactions until many existing securities laws against financial fraud become unenforceable.

A growing scandal in North Carolina

If the North Carolina Retirement System and its sole trustee, Treasurer Janet Cowell (D), seem familiar to tech readers, that is because the NC system is one of the lead plaintiffs in the class action suit surrounding Facebook’s initial public offering. Additionally, as part of her career in the financial sector, Cowell was the marketing director for the tech-focused VC firm, SJF Ventures.

Like other states, North Carolina has been redacting and/or refusing to release the contractual terms of its pension fund’s massive Wall Street investments, even though the contracts involve public money and a public agency.* In recent months, that practice exploded into a full-fledged political scandal when the State Employees Association of North Carolina released a 147-page report from former SEC investigator Ted Siedle.

The report asserted that under Cowell, up to $30 billion of state money is now being managed by high-risk, high-fee Wall Street firms, and that the state could soon be paying $1 billion a year in fees to those firms. The report also noted that the investment strategy “has underperformed the average public plan by $6.8 billion” and it alleged that Cowell has misled the public about how where exactly she is investing taxpayer dollars. The union has called for a federal investigation, while Cowell has publicly denied the allegations.

Note that it’s state employees, a majority of whom are presumably Democrats, calling for a federal investigation of a Democratic state official.

I don’t know whether the state’s Republicans just haven’t had this issue on their radar, or whether they see a payoff in insulating investment banks and other financial institutions with which the state does business from criminal liability. But either way, their silence is puzzling. And since banks are about as popular with Americans right now as strychnine, this down-low approach by the GOP doesn’t even make political sense.

*This practice appears to this layperson to be a clear violation of North Carolina’s Open Records Law. No exception recognized in the statute to the presumption that a record is public applies to this information. This practice appears to be the equivalent of your stockbroker refusing to tell you where and how he has invested your money: Would you find that arrangement acceptable?

North Carolina’s investment performance in alternative investments is terrible. Of 23 reporting public pension funds, it ranked 21 in real estate and 23 in private equity. Whether due to corruption or incompetence, it is clear the state would have done better and at lower cost buying a mix of index funds. So the notion that these persistent bad results are due to payola is worth taking seriously.

However, the overwhelming majority of abuses Siedle cites [in the report linked above — Lex], such as charging of dubious fees, pervasive broker-dealer violations, pension fund consultant conflicts of interest, various securities and tax law violations, also take place with investors who have no potential for pay to play to be operating, such as private pension funds, life insurers, and endowments like Harvard that also invest in private equity. We’ve written about many of these bad practices in earlier posts, and have had to stress the degree to which limited partners have deeply internalized the idea that they can get better returns from private equity than from other investment strategies, and therefore they can’t cavil about the terms, since otherwise they won’t be allowed into this club. In keeping, the SEC has said, with uncharacteristic bluntness, that supposedly sophisticated limited partners have entered into agreements which are vague on far too many key terms and weak on investor protections.

Disclosure: Never having worked as a public employee in North Carolina or anywhere else, I have no direct interest in the state’s pension fund; nor, so far as I know, do I have any indirect interest beyond being a North Carolina taxpayer.

I see now that bloody-handed GOP foreign-policy apparatchik John Bolton has leaped into the fray as well, joining the Cheneys, Lindsay Graham, Paul Wolfowitz and all the other bloody-minded neocons in arguing that we need to KILL KILL KILL in Iraq because MURCA!

And news-media outlets of all political stripes are giving these effups a platform.

Yo, media: Stop. Just. Stop.

Every one of these people was wrong, wrong, WRONG about Iraq. They lied us into a war, they lied to us about how much it would cost in blood AND treasure, they lied to us about how we would be received, they killed thousands of American troops and hundreds of thousands of Iraqi troops and civilians for a lie, and in the process they mismanaged the whole thing to the point at which it would have been impossible to mess it up worse if they had been trying, if in fact they were not. ANY news outlet giving ANY of these people a platform anymore is committing journalistic malpractice, full stop.

(As I’ve said before, I, too, was wrong about Iraq. I supported the invasion because I believed the lies about a possible nuclear program and not for any other reason. I knew damn well that the case was far from conclusive, but the idea of Saddam with a nuke combined with my belief that no administration would deliberately lie this country into a war to overcome my misgivings. To borrow from “Animal House,” I fucked up. I trusted them. But my mistake, however naive, at least was honest. These people, with far more information, fabricated a casus belli, which is a war crime by definition.)

Media, if you truly want to help your readers/viewers understand Iraq rather than just beating the drum for MOAR WAR, you might do well to consult some of the people who were right about Iraq. Just for starters, here’s Athenae, who predicted in 2006 what’s happening today:

It occurred to me this weekend, listening to family and others talk about the war, that really what we’re doing now as a country is looking for some answer that doesn’t make us wrong, doesn’t make us [expletive]s, doesn’t make us the people who screwed this up so catastrophically that there’s no way out.

You see that with McCain and his troop plans, you see it with various Bush officials and their whole “we have to give it time, just like Vietnam” schtick (which, way to lose the five people you still had on this issue, Genius McMensa), and you see that with every single person around the Thanksgiving table that talks about how “we can’t leave now, it’ll just turn into chaos.” And I think the liberal war supporters are most swayed by the last argument, because c’mon, they clung so desperately to their hope that Bush wouldn’t cock this up, plus they were the ones screaming about US sanctions and repression in the Middle East long before we needed those excuses to blow some stuff up.

Things will be horrible if we leave. The answer to that last is always, unequivocably yes, yes, it will. Iraq will continue to be chaos, civil war, a breeding ground for hatred of America and a place of misery for those who live there. When the bough breaks, the cradle of civilization will fall. It’s time to stop dancing around that and just admit it. If we leave, it will be awful. For us, for them, for everyone.

BUT THERE’S NOTHING WE CAN DO TO STOP IT ANYMORE.

We lost this war three weeks after the invasion; we lost this war two and a half years ago at least. Those of you who read this blog just to be pissed off and think I take some pleasure in that can just go [expletive] off, you don’t know how much I wanted to be wrong about the sick feeling in my gut at seeing the looting start. We lost this war before it even began, with the piss-poor excuses for planning that gave us the Ballad of Dougie Feith and His Sidekick Ahmed Chalabi, that gave us Curveball and WMDs and letting libraries burn. We lost this war when we marched in with our own ideas about how to run Iraq and as much as said to the locals, [expletive] off now, let us play with our new toy. We lost this war long ago, while the majority of Americans were still waving flags and singing “we’ll put a boot in your ass, it’s the American way.” The only way to fix it, the only way to win, is to build ourselves a time machine and go back and not invade in the first place.

What’s more, I think the people saying we can’t abandon the Iraqi people, I think they know it, too. I think deep down they know there’s no way this is going to end well, considering how it began. I think deep down they know there’s no way to turn this around, but they don’t want to look at it yet, stare themselves in the face, see how completely and utterly taken they got. Take responsibility for the collective American failure. Take the weight of that on their souls.

I do get it: It’s not wrong to want the best. But it is selfish and small and downright immoral to allow your wanting the best to put others in danger when you know your delusions are just that. You have the right to pretend. You don’t have the right to ask someone to die for your puppet show. You don’t have the right to keep thinking it’ll get better, not when you know it won’t.

And so the answer to the statement, the desperate excuse, the Hail Mary: “We can’t just leave, it’ll be chaos.”

Yes. Yes, it will.

But American news media still insist on dividing their potential sources into the Very Serious People like Cheney and Bolton and Rumsfeld and Wolfowitz and so on, and those of us who disagree with them, who are dismissed as “unserious” or, in Internet parlance, Dirty [Expletive]ing Hippies. And those media ignore the fact that the “unserious” people, the DFHs, have been right all along.

Sadly, this phenomenon of providing platforms to people who have been proved wrong repeatedly isn’t limited to the subject of Iraq. It also applies to the economy and jobs, global warming, and just about every other major public-policy issue. I believe Driftglass said it best:

If there’s one thing this country does not need, is that we should be taking advice from Dick Cheney on wars. Being on the wrong side of Dick Cheney is being on the right side of history. To the architects of the Iraq War who are now so eager to offer their expert analysis, I say, Mr. President, thanks, but no thanks. Unfortunately, we have already tried it your way and it was the biggest foreign policy blunder in the history of the country.

Somefoes of the Iraq War complain that because Reid voted for war, he’s somehow just as guilty. And why not? Because believing that no administration would intentionally lie us into a war is EXACTLY as bad as the actual lying, right?

Like this:

Friday, June 6, 2014 1:33 pm

NORMANDY BEACHHEAD, June 17, 1944 – In the preceding column we told about the D-day wreckage among our machines of war that were expended in taking one of the Normandy beaches.

But there is another and more human litter. It extends in a thin little line, just like a high-water mark, for miles along the beach. This is the strewn personal gear, gear that will never be needed again, of those who fought and died to give us our entrance into Europe.

Here in a jumbled row for mile on mile are soldiers’ packs. Here are socks and shoe polish, sewing kits, diaries, Bibles and hand grenades. Here are the latest letters from home, with the address on each one neatly razored out – one of the security precautions enforced before the boys embarked.

Here are toothbrushes and razors, and snapshots of families back home staring up at you from the sand. Here are pocketbooks, metal mirrors, extra trousers, and bloody, abandoned shoes. Here are broken-handled shovels, and portable radios smashed almost beyond recognition, and mine detectors twisted and ruined.

Here are torn pistol belts and canvas water buckets, first-aid kits and jumbled heaps of lifebelts. I picked up a pocket Bible with a soldier’s name in it, and put it in my jacket. I carried it half a mile or so and then put it back down on the beach. I don’t know why I picked it up, or why I put it back down. …

On July 4th, 1944, the Bedford Bulletin reported that Company A had been commended for their actions on D Day – but still, no news about individual Bedford Boys. It was about this time that letters written to the men came back as undeliverable.

Bette Wilkes would be the first to get some news, a month after D Day, and it was much less than official. She was standing on a street corner when called to by a woman across the street. “Bette, did you hear about John?” Then the woman crossed the street – “he was killed.” Bette rushed home in a state of shock. Family tried to convince her that surely the government would have told her if anything had happened. Bette Wilkes never revealed the name of the bearer of bad tidings.

Another letter followed to the Fellers family that Taylor had been killed, but still no word from the Army. According to Helen Stevens, “it was like waiting for an earthquake.”

On July 17th, twenty one year old Elizabeth Teass reported to her job at Green’s drugstore where she was the Western Union Operator. She switched on her teletype machine and sounded a bell heard in Roanoke twenty-five miles away. She typed the words, GOOD MORNING. GO AHEAD. BEDFORD. Words came chattering back. GOOD MORNING. GO AHEAD. ROANOKE. WE HAVE CASUALTIES. Teass watched as one telegram, then two, then three came through. She waited for it to stop but it didn’t, not for a long time. Teass was in shock, why so many? But she knew her job. The families must be the first to know. …

There could not possibly be a more appropriate place for the National D Day Memorial that was dedicated on June 6th, 2001.

Of the thirty five Bedford Boys who went away to war, thirteen came home.

Like this:

At 0016 hours, June 6, 1944, the Horsa glider crash-landed alongside the Caen canal, some 50 meters from the swing bridge crossing the canal. Lt. Den Brotheridge, leading the twenty-eight men of the first platoon, D company, the Oxfordshire and Buckinghamshire Light Infantry Regiment, British 6th Airborne Division, worked his way out of the glider. He grabbed Sgt. Jack “Bill” Bailey, a section leader, and whispered in his ear, “Get your chaps moving.” Bailey set off with his group to pitch grenades into the machine-gun pillbox known to be beside the bridge. Lieutenant Brotheridge gathered the remainder of his platoon, whispered, “Come on, lads,” and began running for the bridge. The German defenders, about fifty strong, were not aware that the long-awaited invasion had just begun.

As Brotheridge led his men at a fast trot up the embankment and onto the bridge, seventeen-year-old Pvt. Helmut Romer, one of the two German sentries on the bridge, saw the twenty-one British paratroopers — appearing, so far as he was concerned, literally out of nowhere — coming at him, their weapons carried at their hips, prepared to fire. Romer turned and ran across the bridge, shouting “Paratroopers!” at the other sentry as he passed him. That sentry pulled out his Leuchtpistole and fired a flare; Brotheridge fired a full clip of thirty-two rounds from his Sten gun.

Those were the first shots fired by the 175,000 British, American, Canadian, Free French, Polish, Norwegian, and other nationalities in the Allied Expeditionary Force set to invade Normandy in the next twenty-four hours. The shots killed the sentry, who thus became the first German to die in defense of Hitler’s Fortress Europe.

Seventy years ago today. I’ve read avidly about this day, and the war of which it was a part, since at least as far back as 1970. I can recite a lot of facts and anecdotes about D-Day, I can talk about Eisenhower’s strategy, the effort and luck involved in the Allies’ scheme to make the Germans think the landing would come at Calais, and so forth and so on. And yet there remains a part of me that just can’t even imagine …

Nine years ago today, my father died. He was 75 and a self-employed financial consultant who was still working about 30 hours a week right up until his final illness (acute pulmonary fibrosis), which lasted a couple of weeks before his death.

From an early age, I heard Dad talk about the importance of saving and investing, and I did the best I could to follow his advice. As I got older and better able to grasp the mechanics, he talked about the stock market as the best long-term investment vehicle for retirement (although he did say that once I hit 50 I should start swapping some equities for bonds).

To the best of my abilities, I have followed his advice. I won’t give you numbers, but I’ll tell you the following: I don’t have a ton of ready cash and never have. But were I to die tomorrow, my family would be pretty well fixed, especially considering I was a journalist, and thus not particularly well paid, for most of my career. Like many Americans, I haven’t gotten a dime in retirement matching for coming up on about seven years now, but — although no one can read the future — I think my family and I will be OK assuming I live to 67 and actually get to retire.

But Dad didn’t live long enough to see the mortgage bubble burst. He didn’t live long enough to hear all the revelations about bank and nonbank and insurance-company and security-rating shenanigans on a scale that dwarfed the crimes of the S&L crisis two decades prior. He thought repealing Glass-Steagall was a bad idea, but he didn’t live long enough to see just how bad. For that matter, he didn’t live long enough to see high-frequency trading and the ease with which the practice makes front-running a trade possible.

So although I’m remembering Dad today with warmth and his passing with sadness, for some reason the Dad thought that has been most on my mind today has been: I wonder what he would make of today’s financial markets? Would he still consider it possible for a single, well-informed investor to do OK? Or would he be convinced, as I have been, that most of the market is a rigged game — that there is a club and that most Americans like me aren’t in it?

(And I’m writing from a middle-class prospective. My problems don’t even begin to touch the problems of the working poor, who are being robbed outright.)

I don’t know what he’d think. All I do know is that while he certainly wasn’t perfect, in his professional life, to the best of my knowledge, he acted with integrity and took seriously his fiduciary duty to his clients. I’m struggling to name a commercial or investment bank that exists today that I’m confident does the same thing.

Monday, June 2, 2014 6:18 pm

For the dozen years that I’ve been running this joint, Fred Gregory has been so much a part of it that despite our frequent disagreements we have been the (dys)functional equivalent of co-hosts. In real life, we met in the late 1980s when I was a cops reporter for the News & Record and he was a Drug Enforcement Administration agent. We’ve been friends since and spent 11 of those years as neighbors besides, and my daughter and his granddaughter became great friends.

The sneaky SOB didn’t tell me this in advance, but this morning he was honored with the Order of the Long Leaf Pine, one of North Carolina’s highest civilian honors, for his career service with the DEA, the Drug Tax Division of the N.C. Department of Revenue, and as a magistrate in the 18th Judicial District here in Guilford County. I congratulate him, and so should you.

You don’t owe me a favor, but I’m asking for one anyway: Go read the essay “The Case for Reparations,” by Ta-Nehisi Coates of The Atlantic.

(Yeah, I’m late to it. I was on vacation. Sue me.)

I concede right up front that this isn’t a simple request. Consequently, as you’re about to see, this is the longest “y’all go read this” post in this blog’s 12-year history.

Likewise, “The Case for Reparations” is a long article — 15,000 words or so. And it deals, obviously, with race, a subject that makes most people uncomfortable and, in the U.S., should discomfit everybody.

But there are some other things you should know.

First, the title is a little misleading — perhaps deliberately so — in that most people probably think that “reparations” means cash payments to make up for black people’s having been slaves. In point of fact, Coates does not call for any such thing, let alone specify an amount, an eligibility standard for individuals, or a distribution mechanism. (This fact, should you see the article discussed elsewhere, will be an easy way to tell which commenters have read the article and which have not.)

Second, even if one brings to the article a broader understanding of “reparations,” one should know that Coates, who is black, has only the vaguest idea of what reparations of any kind might look like, that he sees the concept as too complex to be defined by any individual. Moreover, he opposed the idea in principle himself until only a couple of years ago. Even today, he thinks, for example, that affirmative action doesn’t really address the needs created by the circumstances he describes.

Third, the article is less an argument for some form of reparations — though it is that — than it is a piece of historical investigative journalism that explains the widespread, longstanding, and ongoing, theft of wealth from black Americans. Coates’s work, as he himself points out, is not entirely original and builds on the work of professional historians. Unless you’re in academia, you’ve probably never heard of many of those he credits. But Coates adds original reporting to the research of his sources to create a plain-English piece of journalism that would be a shoo-in for a National Magazine Award even if it weren’t advocating a thing.

And let me emphasize again his subject: the widespread, longstanding, and ongoing, theft of wealth from black Americans. This piece isn’t just about slavery, and another way to separate those commenters who have read the piece from those who have not will be that the extent to which a commenter dwells on slavery likely will be in inverse proportion to the likelihood that that commenter has read the article.

The article does several important things. Primarily, it outlines the economic case for some form of restitution for black Americans. But in explaining the basis for that restitution, it also points out how utterly inconsequential arguments about “pathological culture” (my words, not his) as a cause for the woes of black Americans are in this context, like arguing the merits of a rezoning case when the sun is about to explode. And it shows in striking granularity how some ordinary people lived long lives in an era of supposed equality and fairness while still being robbed blind — not just by slavery, not just by private corporations, but also by their own government even as that government claimed to be working for fairness and equality of opportunity.

To call this article a home run would be to grossly understate its significance. Some home runs barely clear the fence. A few reach the upper deck of stadium seats. This one won’t fall back to Earth for years.

So go read it. I’m not asking you to do anything about its subject, not least because I myself have no idea, at this point, what should be done. But just read it and think about it and ask yourself what should be done. The article suggests one starting point, one that wouldn’t result in the transfer of a single dime from anyone to anyone. But every thinking American ought to think about this.

It’s been said in many places by many people that slavery is America’s original sin. That’s true, but it’s only part of the truth, in that the original sin actually encompasses more than slavery. Americans who truly want this country to be what it told the world almost 240 years ago that it wanted to be must grapple with this original sin and how we go about expiating it. I cannot think of a better place to start than this article.